How millennial software buyers killed Circuit City

Remember Circuit City? In the mid-2000s, it was where many business software buying decisions were made. There were rows upon rows of tools like Microsoft Project 2002 and Business Plan Writer Deluxe 8.0. Sales managers worked the floors to help entrepreneurs select the right software for their business.

They focused on their customers’ rugged individualism and tended to stick with hard numbers: these buyers were mostly interested in data, ROI, and quantitative analysis. The customers would buy a physical box, software and instructions included, and then proceed to install directly onto their business computer’s hard drive.

Buying business software is an entirely different experience today. Most buyers would balk at going to a physical store to purchase software when a quick download or optimised website is available. Salespeople before research? No interoperability between mobile, tablet, or desktop? Today’s buyers say “no thanks” to the buying process popular just a decade ago.

It may be easy to point to technological advancements for the change of buying behavior, but there’s one other variable at work: who’s buying. In the 00’s, entrepreneurial Generation Xers (born between 1961 and 1981) were largely in charge of making business software buying decisions. Today, Millennials (born after 1982) take on the brunt of that responsibility. While Boomers might give the final stamp of approval, the biggest group (47.2 per cent) of those narrowing down products and making suggestions to management are under the age of 34.

In contrast, only 40.3 per cent of Xers and 8.3 per cent of Boomers are involved with the B2B software buying process. Those older than 65 make up the last 4.2 per cent. As Millennials age into software research roles — and Xers age out — the markets have bent to appeal to them. The market has reacted by restructuring the emphases on sales and marketing, stressing consumer preferences, and creating space for smaller players entering the industry. Just ten years ago, the average B2B software buyer did not have much information to make informed buying decisions. They might have inherited an old system and stuck with it as a default, sought out software companies based on brand reputation (including big companies like Oracle and Microsoft), or simply spoke to salespeople. In fact, traditional and online software marketing was largely brushed aside because salesmen were top-and bottom-of funnel.

Consider this forum discussion from 2004. A college student was interested in selling his software online and was asking how to best go about it. The response? “There are commercial software vendors in nearly every industry that make software... they have financial backing and tons of employees. What software could you write that would be better or compete with theirs?” In other words, don’t even try.

Compare that to today. Internet marketing is its own industry and, in a lot of ways, supersedes sales. For example, CEB found that most B2B buyers are 57-70 per cent through their research before making contact with sales. Whitepapers, infographics, and articles that are buyer-focused now do what sales used to: inform software researchers. Instead, sales associates now centre on how their software can tailor to each lead’s requirements.

For Millennials, this change means they can continue avoiding the phone and order products online like they do in retail. No wonder Circuit City (along with CompUSA and eventually Best Buy) are shutting their doors. The appeal of having a tangible product just doesn’t excite Millennials. What does inspire today’s buyers, however, are reviews and sites that aggregate verified product users’ ratings and feedback so future buyers are better informed. Notorious for being community oriented (likely from their childhood’s emphasis on being inclusive and participating in teams), Millennials like to know what the overarching sentiment on a product is before buying. Reviews were certainly available a decade ago, but as Millennials make up more software buyers, they will force software companies to solicit more candid feedback from their customers.

Reviews are also a reflection of B2B software’s growing diversity. As shoppers a decade ago relied on brand names — SAP, HP, and Adobe, for example — to guarantee quality, today’s buyers have many, many more B2B software options, and a willingness to try out new players. For instance, popular project management software then and now includes Microsoft Project, Atlassian Jira, and VersionOne. However, these three major brands struggle to compete with new, SaaS-based products like Podio (founded in 2009), Trello (2011), and Taskworld (2013). While Microsoft Project remains the most popular project management app, their market share has consistently decreased over the past ten years.

When looking for B2B software now and beyond, buyers are no longer constrained to box stores, gimmicky salespeople, and limited options. Today, software companies compete to tailor their product to their consumers’ requests as opposed to buyers tinkering their budget to get the software they need.

Just like what’s happening in the housing and wine markets, the “Me Me Me” generation is making purchasing software consumer-focused. In the future, that may mean more individualisation efforts — a possibility that can only make the consumer happy in the long run.